October 2011 Archives

Wall Street’s audacity to corrupt knows no bounds and the cooptation of government by the 1 per cent knows no limits. How else to explain $150 million of taxpayer money going to equip a government facility in lower Manhattan where Wall Street firms, serially charged with corruption, get to sit alongside the New York Police Department and spy on law abiding citizens….

The surveillance plan became known as the Lower Manhattan Security Initiative and the facility was eventually dubbed the Lower Manhattan Security Coordination Center. It operates round-the-clock. Under the imprimatur of the largest police department in the United States, 2,000 private spy cameras owned by Wall Street firms, together with approximately 1,000 more owned by the NYPD, are relaying live video feeds of people on the streets in lower Manhattan to the center. Once at the center, they can be integrated for analysis. At least 700 cameras scour the midtown area and also relay their live feeds into the downtown center where low-wage NYPD, MTA and Port Authority crime stoppers sit alongside high-wage personnel from Wall Street firms that are currently under at least 51 Federal and state corruption probes for mortgage securitization fraud and other matters.

In addition to video analytics which can, for example, track a person based on the color of their hat or jacket, insiders say the NYPD either has or is working on face recognition software which could track individuals based on facial features. The center is also equipped with live feeds from license plate readers.

According to one person who has toured the center, there are three rows of computer workstations, with approximately two-thirds operated by non-NYPD personnel. The Chief-Leader, the weekly civil service newspaper, identified some of the outside entities that share the space: Goldman Sachs, Citigroup, the Federal Reserve, the New York Stock Exchange. Others say most of the major Wall Street firms have an on-site representative….

The project has been funded by New York City taxpayers as well as all U.S. taxpayers through grants from the Federal Department of Homeland Security. On March 26, 2009, the New York Civil Liberties Union (NYCLU) wrote a letter to Commissioner Kelly, noting that even though the system involves “massive expenditures of public money, there have been no public hearings about any aspect of the system.”

This move reflects either criminal incompetence or abject corruption by the Fed. Even though I’ve expressed my doubts as to whether Dodd Frank resolutions will work, dumping derivatives into depositaries pretty much guarantees a Dodd Frank resolution will fail. Remember the effect of the 2005 bankruptcy law revisions: derivatives counterparties are first in line, they get to grab assets first and leave everyone else to scramble for crumbs. So this move amounts to a direct transfer from derivatives counterparties of Merrill to the taxpayer, via the FDIC, which would have to make depositors whole after derivatives counterparties grabbed collateral….

During the savings & loan crisis, the FDIC did not have enough in deposit insurance receipts to pay for the Resolution Trust Corporation wind-down vehicle. It had to get more funding from Congress. This move paves the way for another TARP-style shakedown of taxpayers, this time to save depositors. No Congressman would dare vote against that. This move is Machiavellian, and just plain evil….

Bill Black said that the Bloomberg editors toned down his remarks considerably. He said, “Any competent regulator would respond: “No, Hell NO!” It’s time that the public also say no, and loudly, to yet another route for running a drip feed from taxpayers to banksters.

If you have money in Bank of America, I would take it out tomorrow and move it to your local bank because BoA appears to have potentially trillions of dollars in gambling losses it has just moved to the same subsidiary that holds your bank account.

(Some, including U.S. Senator Bernie Sanders (I-VT), advocate moving money out of major banks for a different reason: to punish them for their predatory behavior. That’s a totally separate issue.)

The 2008 financial crisis could look like a hiccup if European defaults trigger massive credit default swap (CDS) payouts from major US banks.

Bank of America’s holding company — the parent of both the retail bank and the Merrill Lynch securities unit — held almost $75 trillion of derivatives at the end of June, according to data compiled by the OCC. About $53 trillion, or 71 percent, were within Bank of America NA.

What SHOULD happen if Bank of America suffers a multi-trillion-dollar gambling loss? The FDIC-insured portion of the bank should remain intact and regular depositors' accounts should remain untouched while the rest of the bank goes bankrupt, shareholders are wiped out, and other creditors fight for scraps in bankruptcy court. Those who placed winning bets with BoA would likely receive pennies on the dollar. And taxpayers would not contribute a nickel.

But Bank of America today did something that potentially puts taxpayers on the hook to bail out tens of trillions of dollars in idiotic BoA gambling losses. BoA moved tens of trillions of dollars of potential gambling losses into the same BoA subsidiary that holds massive quantities of FDIC-insured bank deposits.

Bank of America Corp. (BAC), hit by a credit downgrade last month, has moved derivatives from its Merrill Lynch unit to a subsidiary flush with insured deposits…

Moving derivatives contracts between units of a bank holding company is limited under Section 23A of the Federal Reserve Act, which is designed to prevent a lender’s affiliates from benefiting from its federal subsidy and to protect the bank from excessive risk originating at the non-bank affiliate, said Saule T. Omarova, a law professor at the University of North Carolina at Chapel Hill School of Law.

“Congress doesn’t want a bank’s FDIC insurance and access to the Fed discount window to somehow benefit an affiliate, so they created a firewall,” Omarova said.

The Federal Reserve and Federal Deposit Insurance Corp. disagree over the transfers, which are being requested by counterparties, said the people, who asked to remain anonymous because they weren’t authorized to speak publicly. The Fed has signaled that it favors moving the derivatives to give relief to the bank holding company, while the FDIC, which would have to pay off depositors in the event of a bank failure, is objecting, said the people.

I’m going to go out on a very short limb and presume one of Bank of America’s counterparties is Goldman Sachs. Years ago, Goldman helped cook Greece’s books to get Greece loans it had no business getting. Based on Goldman’s behavior, I would be shocked if Goldman didn’t then turn around and use its inside information to place massive bets (through credit default swap derivatives) against Greece’s debt. Merrill Lynch (now part of Bank of America) apparently was the stooge for many such stupid CDS bets that Bank of America is now on the hook for. If so, then Bank of America is on the hook to Goldman for tens of trillions of dollars if the European debt crisis explodes. And Goldman — worried BoA wouldn’t be able to pay off its gambling debt — has now forced Bank of America to taxpayers on the hook for the gambling debt.

If taxpayers are stuck with tens of trillions in derivative contract (gambling) losses, we’ll all soon look back at the 2008 banking crisis as “the good old days.”

I (finally) started Tweeting in August and have found Twitter to be a superb tool for keeping up with the ever-changing tech world. But Tweets seem pretty ephemeral, so I decided to write a script to archive my Tweets. Thanks to the “twitter” Ruby gem, it’s quite easy to save the past week’s worth of Tweets. But going back in time required a lot of annoying copy-and-paste (and translating quotation marks to “&quot;” and back again to make JSON happy). Anyhow, I’ve now collected here all my Tweets, some of which (esp. retweets) I think are very funny:

RT @KentBeck: my favorite idea from steve jobs is it’s the programmer’s job to adapt the computer to the user, not the user’s job to adapt to the computer (06 Oct)

Hank Williams Jr accuses ESPN of stomping on Free Speech, but that protects against govt. Compare Obama to Hitler and people can ignore you! (06 Oct)

Cucumber scenarios should not be a series of steps [saying] what a user clicks [but] should express what a user does github.com/cucumber/cucumber-rails/commit/f027440965b96b780e84e50dd47203a2838e8d7d/ (06 Oct)

Nobel winner: “There was a Swedish voice on the phone. I knew it wasn’t Ikea. I quickly realized the magnitude of it.” businessweek.com/news/2011-10-04/scientists-win-physics-nobel-for-dark-universe-discovery.html/ (04 Oct)

After installing 500GB HD, I figured I was set. But that encouraged me to download video and now I’m constantly struggling to free up space. (04 Oct)

If I pay my cable (and Internet) provider $150/month, why can’t I watch TV without being bombarded with ads? Commercial TV used to be free. (04 Oct)

RT @paul_irish: More on CSS shaders: adobe.com/devnet/html5/articles/css-shaders.html/ between this and CSS Filters (dvcs.w3.org/hg/FXTF/raw-file/tip/filters/publish/Filters.html/), the web is about to get so so so hot. (04 Oct)

RT @webtonull: A DBA walks into a NOSQL bar, but turns and leaves because he couldn’t find a table (04 Oct)

RT @DavidSacks: TSA patted down my 2-year-old and swabbed her hands for bomb residue. Our country has lost its mind. (07 Sep)

RT @gruber: Shorter Mike Arrington: “I sold my company (to a bunch of idiots) and expected to still maintain control over it.” (06 Sep)

RT @Nouriel: Berlusconi defense: I screwed the entire country for 10 yrs for free & no one cared. Now I screwed a few for money and they give me hell (04 Sep)

BN.com canceled my TouchPad order 2 ½ days after I placed it. Thanks for getting my hopes up and preventing me from buying elsewhere! (24 Aug)

Oops. That’s “classy family.” Note to self: Never squeeze in a last-second Tweet while running out door to take daughter to doctor’s office. (24 Aug)

Quiz: Your son plays for the NY Jets. Who do you cheer for? The Patriots, of course! Classfy family! nesn.com/2011/08/james-ihedigbos-family-still-rooted-for-patriots-when-he-played-for-jets.html (24 Aug)

RT @Nouriel: US has crumbling infrastructure & tons of laid off workers in construction. So we need a new fiscal stimulus to build infrastr & create jobs (19 Aug)

Alcohol’s good for my brain! Good thing I drank two beers while watching the (unstoppable) Patriots last night! ibtimes.com/articles/200678/20110819/moderate-drinking-alcohol-consumption-reduce-dementia-alzheimer-s-risk-study.htm (19 Aug)

RT @Nouriel: Thus gold, like US Treas yields, is pricing risk that we go into another deflationary depression & global financial meltdown, not inflation (18 Aug)

Over and over, loyal, deserving employees with modest incomes have watched their planned retirement savings disappear because of corporate managers and pension industry consultants. Journalist Ellen Schultz has been writing about such shameful behavior for a long time, mostly in The Wall Street Journal. Now she has pulled together the copious, irrefutable evidence between the covers of a book. It is shocking, and demoralizing….

The book is crammed with heartbreaking anecdotes of retirees suffering (and in some cases probably dying) because of pension-related corporate greed. But the perpetrators have not been charged with any crimes.

…she writes, “What [GE CEO] Immelt didn’t mention was that, far from being a burden, GE’s pension and retiree plans had contributed billions of dollars to the company’s bottom line over the past decade and a half, and were responsible for a chunk of the earnings that the executives had taken credit for. Nor were these retirement programs — even with GE’s 230,000 retirees — bleeding the company of cash. In fact, GE hadn’t contributed a cent to the workers' pension plans since 1987 but still had enough money to cover all the current and future retirees.”

Then Schultz delivers the clincher: GE was indeed burdened by a pension plan — the plan for top executives. The obligations of that plan, for a minuscule number of individuals compared with the 230,000 lower-level retirees, totaled $4.4 billion and had drained about $573 million from the corporate treasury over the past three years.

In theory, I’ve always liked the database agnosticism of Rails migrations. But, in practice, my migrations are PostgreSQL-specific because I usually fall back to writing SQL DDL statements since standard migrations can’t create essential database features like foreign key constraints and uniqueness constraints (which must exist in the db layer as well as the model layer or you’ll eventually have problems).

I thought of a solution that probably seems obvious to many developers, but I didn’t realize it till now.

From now on, I’ll write as much as I can using standard Rails migrations and then tack on Postgres-specific enhancements wrapped in a test that returns true if-and-only-if the database is Postgres. ActiveRecord makes it easy to test for the database adapter:

if ActiveRecord::Base.connection.adapter_name == ‘MySQL’

This embraces the same progressive enhancement principle advocated for adding JavaScript to web pages, for example.

This way, Rails migrations remain database agnostic yet also can add use proprietary database extensions. An added bonus: future developers can see the conditional code and adapt it for other databases if they wish.